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Cradle to Grave
125
state and local officials who regard themselves as benefiting from
the programs, and, above all, the welfare bureaucracy that ad-
ministers them." The less obvious obstacle is the conflict among
the objectives that advocates of welfare reform, including existing
vested interests, seek to achieve.
As Martin Anderson puts it in an excellent chapter on "The
Impossibility of Radical Welfare Reform,"
All radical welfare reform schemes have three basic parts that are
politically sensitive to a high degree. The first is the basic benefit level
provided, for example, to a family of four on welfare. The second is
the degree to which the program affects the incentive of a person on
welfare to find work or to earn more. The third is the additional cost
to the taxpayers.
. . . To become a political reality the plan must provide a decent
level of support for those on welfare, it must contain strong incen-
tives to work, and it must have a reasonable cost. And it must do all
three at the same time.
27
The conflict arises from the content given to "decent," to
"strong," and to "reasonable," but especially to "decent." If a
"decent" level of support means that few if any current recipients
are to receive less from the reformed program than they now do
from the collection of programs available, then it is impossible to
achieve all three objectives simultaneously, no matter how "strong"
and "reasonable" are interpreted. Yet, as Anderson says, "There
is no way that the Congress, at least in the near future, is going
to pass any kind of welfare reform that actually reduces payments
for millions of welfare recipients."
Consider the simple negative income tax that we introduced as
an illustration in the preceding section: a break-even point for a
family of four of $7,200, a subsidy rate of 50 percent, which
means a payment of $3,600 to a family with no other source of
support. A subsidy rate of 50 percent would give a tolerably
strong incentive to work. The cost would be far less than the
cost of the present complex of programs. However, the support
level is politically unacceptable today. As Anderson says, "The
typical welfare family of four in the United States now [early
1978] qualifies for about $6,000 in services and money every
year. In higher paying states, like New York, a number of welfare

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FREE TO CHOOSE: A Personal Statement
families receive annual benefits ranging from $7,000 to $12,000
and more."
28
Even the $6,000 "typical" figure requires a subsidy rate of
83.3 percent if the break-even point is kept at $7,200. Such a rate
would both seriously undermine the incentive to work and add
enormously to cost. The subsidy rate could be reduced by making
the break-even point higher, but that would add greatly to the
cost. This is a vicious circle from which there is no escape. So
long as it is not politically feasible to reduce the payments to
many persons who now receive high benefits from multiple cur-
rent programs, Anderson is right: "There is no way to achieve
all the politically necessary conditions for radical welfare reform
at the same time."
2s
However, what is not politically feasible today may become
politically feasible tomorrow. Political scientists and economists
have had a miserable record in forecasting what will be politically
feasible. Their forecasts have repeatedly been contradicted by
experience.
Our great and revered teacher Frank H. Knight was fond of
illustrating different forms of leadership with ducks that fly in a
V with a leader in front. Every now and then, he would say, the
ducks behind the leader would veer off in a different direction
while the leader continued flying ahead. When the leader looked
around and saw that no one was following, he would rush to get
in front of the V again. That is one form of leadership—un-
doubtedly the most prevalent form in Washington.
While we accept the view that our proposals are not currently
feasible politically, we have outlined them as fully as we have, not
only as an ideal that can guide incremental reform, but also in
the hope that they may, sooner or later, become politically feasible.
CONCLUSION
The empire ruled over until recently by the Department of Health,
Education and Welfare has been spending more and more of our
money each year on our health. The main effect has simply been
to raise the costs of medical and health services without any cor-
responding improvement in the quality of medical care.

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Cradle to Grave
127
Spending on education has been skyrocketing, yet by common
consent the quality of education has been declining. Increasing
sums and increasingly rigid controls have been imposed on us to
promote racial integration, yet our society seems to be becoming
more fragmented.
Billions of dollars are being spent each year on welfare, yet at
a time when the average standard of life of the American citizen
is higher than it has ever been in history, the welfare rolls are
growing. The Social Security budget is colossal, yet Social Se-
curity is in deep financial trouble. The young complain, and with
much justice, about the high taxes they must pay, taxes that are
needed to finance the benefits going to the old. Yet the old com-
plain, and with much justice, that they cannot maintain the stan-
dard of living that they were led to expect. A program that was
enacted to make sure that our older folks never became objects
of charity has seen the number of old persons on welfare rolls
grow.
By its own accounting, in one year HEW lost through fraud,
abuse, and waste an amount of money that would have sufficed
to build well over 100,000 houses costing more than $50,000
each.
The waste is distressing, but it is the least of the evils of the
paternalistic programs that have grown to such massive size. Their
major evil is their effect on the fabric of our society. They weaken
the family; reduce the incentive to work, save, and innovate; re-
duce the accumulation of capital; and limit our freedom. These
are the fundamental standards by which they should be judged.

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